David Leonhardt once again delivers with a great column, this time on the global enthusiasm for austerity. He sums up the case against the austerity wave sweeping the world, and summarizes why it’s happening anyway:

The reasons vary by country. Greece has no choice. It is out of money, and the markets will not lend to it at a reasonable rate. Several other countries are worried — not ludicrously — that financial markets may turn on them, too, if they delay deficit reduction. Spain falls into this category, and even Britain may.

Then there are the countries that still have the cash or borrowing ability to push for more growth, like the United States, Germany and China, which happen to be three of the world’s biggest economies. Yet they are also reluctant.

China, until recently at least, has been worried about its housing market overheating. Germany has long been afraid of stimulus, because of inflation’s role in the Nazis’ political rise. In responding to the recent financial crisis, Europe, led by Germany, was much more timid than the United States, which is one reason the European economy is in worse shape today.

The reasons for the new American austerity are subtler, but not shocking. Our economy remains in rough shape, by any measure. So it’s easy to confuse its condition (bad) with its direction (better) and to lose sight of how much worse it could be. The unyielding criticism from those who opposed stimulus from the get-go — laissez-faire economists, Congressional Republicans, German leaders — plays a role, too. They’re able to shout louder than the data.

Having praised the column, I’m now going to quibble. As I’ve said before, it’s true that Germans are paranoid about inflation and it’s true that Germany had a major inflation problem in the 1919-1923 period, but it’s simply false to say that inflation played an important role in the rise of the Nazis. In 1924 there was no inflation problem and the Nazis were politically marginal. The same was true in 1925, and in 1926, and in 1927, and in 1928. By the election of 1930, the country was mired in deflation and sky-high unemployment and Nazis were securing over ten percent of the seats in parliament. Those trends—deflation, high unemployment, and a rising share of the Nazi vote—set the stage for the eventual decision of Germany’s mainstream conservatives to hand power over to Hitler. But it was monetary orthodoxy and excessive fear of socialism that put the Nazis in power.

So German policy is more irrational than Leonhardt makes it out to be, in my view. Conversely, Chinese policy is more rational than this summary suggests. Chinese economic growth is robust and Chinese inflation worries are grounded in actual changes in the price level. One can quibble with the precise implementation of tightening in China, but the general direction of policy has been correct—expansionary where needed, now cooling off.

Conversely, when discussing the United States I think Leonhardt does too much to downplay institutional structure. The President of the United States favors more stimulus. So does the Speaker of the House of Representatives and a majority of House members. So does the Majority Leader of the Senate and a majority of Senators. Supermajority rules in the Senate, the vicissitudes of partisan politics, and the fact that the unemployment rate in Nebraska is idiosyncratically low seem to me to be the main factors driving policy.

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